As every year during the holiday season, the Polish Financial Supervision Authority published a report showing „clients’ results on the Forex market” achieved in 2021. Traditionally, the overwhelming majority of speculators using leveraged OTC derivatives suffered a loss, the total value of which for the second time in the history of KNF statistics exceeded PLN 1 billion. The number of clients of brokers supervised by the Polish Financial Supervision Authority who suffered a loss last year is also record-breaking. After all, last year’s statistics are not as bad as you might think from reading the headlines.

Over 70% of speculators are in the red – sounds weak, but it’s never been so good

The Polish Financial Supervision Authority published an annual report on the results of clients on the Forex market for 2021. They are based on data from domestic CFD brokers licensed by the Polish Financial Supervision Authority, and their methodology assumes the result per balance of Polish and foreign clients at the end of the calendar year. The breakdown covers transactions on all types of leveraged OTC derivatives, not only those that give exposure to currency pairs (Forex).

Traditionally, as every year, most clients of CFD brokers suffered a loss – in 2021 the percentage of clients who ended up in negative terms was 71.9%. On the one hand, it would seem that this is a disturbingly high result, on the other hand – it is the lowest percentage of losing clients since 2016 , i.e. since the beginning of the publication of data by the Polish Financial Supervision Authority in its current form.

Thus, the percentage of clients of CFD brokers who finished last year in positive territory (28.1%) was the highest in the history of statistics kept by financial supervision.

For comparison – the percentage of traders who suffered a loss in 2020 was as high as 77.7% , which means that only 22.3% of clients managed to break out of the positive or zero.

The average loss per one client in 2021 was PLN 14,394, while the average profit per traders who ended last year in the black was estimated by the Polish Financial Supervision Authority at PLN 13,127. The average result achieved by a statistical client of a Polish CFD broker in 2021 is PLN 6657 in the minus. It is worth adding that this is the second best result (the lowest loss) in the history of statistics so far (after 2019, when the average result was PLN 6,354 in the minus).

For comparison, in 2020, the average loss per customer last year was over 19 thousand. PLN, while the average profit of traders who ended 2020 in the black reached 15.5 thousand. zlotys. The average result achieved by a statistical trader in 2020 is PLN 11,370 in the minus.

The total loss of clients using CFDs with Polish brokers amounted to over PLN 1.158 billion in 2021. This is the second time in history when the total loss exceeds PLN 1 billion – in 2020 its value was slightly higher (less than PLN 1.19 billion in the minus). However, it is not surprising that the total loss is so high when we compare it with the number of active customers – in 2021 it amounted to 111,966 people , of which 80,488 (the most in the history of statistics) suffered a loss. On the other hand, the number of clients who made a profit on contracts for difference last year was also record high (31,478 people).

For comparison, in 2020, the loss of almost PLN 1.19 billion was much smaller, i.e. 62,334 customers.

The total profit made in 2021 amounted to over PLN 413.2 million, which is undoubtedly the best result in the history of KNF statistics. For comparison, in 2020, the realized total profit of CFD brokers’ clients amounted to PLN 277,418,413.

When it comes to clients of CFD brokers who are only Polish residents, the statistics for 2021 are as follows:

• Losing customer proportion: 71.8% (71.9% overall)
• Number of clients who have suffered a loss: 38,300 (total 80,488)
• Average profit per client: PLN 14,496 (PLN 13,127 in total)
• Average loss per customer: -17 149 PLN (-14 394 PLN in total)
• Average result achieved by the client: PLN -8,229 (PLN -6,657 in total 
• It is difficult to say what results were achieved by the clients of a particular broker, and it is also difficult to clearly state to what extent the choice of the platform itself affects the achieved rates of return. However, brokers licensed by the Polish Financial Supervision Authority must – in accordance with the European ESMA supervision regulations – in their risk warning clauses inform about the percentage of clients who have increased a loss in a given year when trading CFDs. For example, at the largest Polish broker, XTB, 79% of retail clients suffered a loss on CFDs last year (i.e. more than the average). Among the clients of TMS Brokers, 76% of traders using contracts for difference incurred a loss in 2012. In the case of the BossaFX broker operating at Bank Ochrony Środowiska, the percentage of clients who ended last year on CFDs with a loss is 70%. mForex, which is part of the mBank Brokerage House, informs in its clause that 71% of losing clients on contracts for difference are reported. The same percentage of clients losing on CFDs is also shown by Dom Maklerski Alior Banku (Alior Trader).

Why are so many losing on Forex (CFDs)?

Every time any statistics related to the OTC leveraged derivatives market are released, the question arises – why are so many clients losing their money? It cannot be concealed that in the history of data on the CFD market (licensed brokers), which have been published in the current form by the Polish Financial Supervision Authority since 2016, and in a rudimentary form since 2013, it has never happened that the interest loss and profitable brokers’ clients came close to the balance (not to mention the predominance of the number of profitable clients). The trader’s average performance was also never positive. There are at least several reasons for this – terrible statistics are mainly due to the very nature of CFDs. They are leveraged derivatives that which are characterized by a very high investment risk. They allow you to take both long and short positions, which means that we are able to suffer a loss not only when the underlying instrument falls, but also when its price rises (when we have a short position). The presence of leverage means that sudden increases in market volatility are able to „throw out of the market” many clients with open positions. It is also quite common to believe that the brokers themselves, who are the other party to the concluded transactions (in the Market Maker model), are also behind the losses of clients. that sudden spikes in market volatility can „throw out” many clients with open positions. It is also quite common to believe that the brokers themselves, who are the other party to the concluded transactions (in the Market Maker model), are also behind the losses of clients. that sudden spikes in market volatility can „throw out” many clients with open positions. It is also quite common to believe that the brokers themselves, who are the other party to the concluded transactions (in the Market Maker model), are also behind the losses of clients.

Admittedly, however, CFD statistics are hardly quantifiable in isolation. For a more complete picture, we should compare them, for example, with the results of individual investors who open positions on leveraged futures contracts or Turbo and Faktor certificates listed on the WSE. Unfortunately, such statistics are not kept by anyone and it may turn out that other leveraged derivatives are also not good for most investors.

A bag with the word Forex

Traditionally, as every year, the report of the Polish Financial Supervision Authority includes a quite significant and difficult to justify simplification – it refers to the term „Forex market”. Financial supervision puts all leveraged derivatives that are outside regulated trading, i.e. the OTC market, into a bag that says Forex . The problem, however, is that the Forex market itself does not have much in common with the leveraged contracts used by clients of brokers participating in the research conducted by the Polish Financial Supervision Authority.

Forex (from English for foreign exchange ) is simply a foreign exchange market, i.e. a global, over-the-counter currency trading center of various countries, which does not have a central hub. In the Forex market, transactions are made that determine the rates of particular currency pairs. For years, it has been the market where the value of daily turnover is the highest – currently it exceeds USD 6 trillion a day, of which approximately 80% of transactions are carried out with the involvement of the US dollar. The most important participants of the currency market are central banks, commercial institutions of the banking sector, currency brokers and liquidity providers that make up the wholesale market. Most of the transactions in the currency market (approx. 90%) take place between banks. Retail is an insignificant part of the Forex market, which allows individual investors to access foreign exchange transactions. „Small players” are able to gain exposure to the currency market using futures , currency options or just contracts for difference (CFDs)to which the KNF report refers in practice.

The „Forex Client Performance” published by financial regulators doesn’t really have much to do with the Forex market . They concern transactions that retail clients concluded with licensed brokers offering leveraged contracts for difference. However, the KNF report does not take into account derivatives listed on a regulated market, such as futures or options.